LOS ANGELES -- General Motors, Ford and Chrysler are all lining up for help from the federal government as they teeter on the brink of collapse.
Noe Privado isn't feeling too sure of things lately, either, and he thinks there's worse to come at his used-car lot in South Los Angeles. Privado and his brother Oscar--both immigrants from El Salvador--have been in business at the corner of Western Avenue and Exposition Boulevard for 15 years. It's a mixed neighborhood--most of their customers are black or Latino. And it looks as though it will take some time before the neighborhood's economy gets back on track.
"Probably another year," Privado says.
Privado's Auto Sales is a relatively small operation, with 30 or so used cars on the lot at any given time. Privado works closely with his customers, and he knows they are weathering their own storms of repossessions and foreclosures.
That's a big switch from just a year ago, when the real estate boom had consumers using home equity loans to purchase cars. Now they can't draw cash out of their houses, and many have trouble getting a loan.
The trickle-down hurts.
"The inability to find suitable financing for consumers with poor credit is a concern for a small business owner," Privado says.
The Privado brothers are trying a number of tactics to scramble for every potential customer these days, trying to offset a dip in sales of nearly 25% over the past six months. They are keeping the dealership open seven days a week and putting in longer hours, often staying in the office until 10 p.m. Some days they see no customers at all, but the elder Privado says he stays on late-night duty because you never know--and he can't afford to miss any sale.
Privado's Auto Sales has been able to make some recent sales by offering in-house financing at low interest rates--provided the buyer can come up with a large down payment. Privado is also trying to get his inventory in line with what demand remains. The high gas prices of recent months have turned buyers away from large SUVs--they're now eyeing compact cars--Toyota Corollas and the like. The slow sales mean a low turnover, though, and the inventory still includes a lot of mid-sized sedans.
All of this pinches cash flow, and the Privado says that he and Oscar are constantly reviewing their operating expenses to find ways to save money. A recent visit found him eating a home-cooked meal prepared by his wife--no lunches out. He has cut back on family vacation plans, and keeps household purchases limited to essentials.
That's a tough squeeze, and Privado fears that another one is coming with the $25 billion bailout being sought by the Big Three automakers, a deal that would likely help ease current difficulties at big branded dealers that sell new models for General Motors, Ford and Chrysler.
"What about the small businesses?" he asks. "The bigger dealers are getting financial help, while small dealers are being squeezed and are disappearing."
Sheannette Virtue is a citizen journalist contributor for the Carib Press.
Leave a comment